IBM, United Technologies, P&G power Dow’s gains
Stocks closed higher in choppy trade Wednesday as upbeat earnings from corporate heavyweights helped to assuage lingering worries over global growth and U.S.-China trade tensions.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, +0.70% gained 171.14 points, or 0.7%, to 24,575.62, while the S&P 500 index SPX, +0.22% rose 5.8 points, or 0.2%, to 2,638.70 and the Nasdaq Composite COMP, +0.08% climbed 5.41 points to 7,025.77.
What drove the market?
Investors are laser-focused on fourth quarter results and closely monitoring what corporate executives are saying about the outlook for profits and revenue in 2019. Earnings reports have been largely well received by investors, starting with International Business Machines Corp. IBM, +8.46% after the management issued a bullish outlook for profits.
On the trade front, Reuters reported that President Donald Trump won’t agree to any deal with China unless Beijing agrees to make substantive changes to the way it does business, including how it handles intellectual property.
Meanwhile, the Senate was poised to vote Thursday on dueling proposals to reopen the government. A partial shutdown entered its 33rd day amid mounting concerns over its potential impact on the economy. Neither proposal set for a vote is seen as likely to pass the Senate, but analysts said movement might provide some hope that the long-running impasse is nearer to a resolution.
In overseas news, events in Venezuela could have an impact on the markets if the political unrest escalates. Venezuela’s President Nicolás Maduro broke off diplomatic relations with the U.S. after Washington’s decision to recognize Juan Guaido, the head of the opposition-controlled congress, as interim president.
What stocks were in focus?
IBM stock soared 8.5% to lead the Dow. Fellow blue chip United Technology Corp. UTX, +5.38% rose 5.4% after the company beat on both revenue and earnings.
Shares of Procter & Gamble Co. PG, +4.87% advanced 4.9% after the firm reported better-than-expected revenue and earnings and raised the high end of its guidance for 2019 organic sales growth.
Shares of Burger King parent Restaurant Brands International Inc. QSR, +9.78% rallied 9.8% after the company named Jose Cil, currently president of Burger King, as chief executive officer. The company also provided upbeat sales data and raised its quarterly dividend.
Shares of Kimberly-Clark Corp. KMB, -2.67% were down 2.7% after the consumer goods company posted a fourth-quarter earnings miss.
Tesla Inc. TSLA, -3.79% shares slid 4% after RBC downgraded the stock to underperform to outperform, while cutting its price target to $245 from $290.
Shares of Comcast Corp. CMCSA, +5.49% rose 5.5% after the internet-service provider exceeded analysts expectations for profits and sales.
Abbott Laboratories ABT, -2.21% stock shed 2.2% after the firm’s fourth-quarter revenue fell short of expectations.
Shares of Synchrony Financial SYF, +10.73% jumped 11% after the firm announced that it had extended its partnership with Walmart Inc.’sWMT, +1.25% Sam’s Club, and reported that Walmart had agreed to dismiss a lawsuit against the company.
What were analysts saying?
“Yesterday the story was all about weakening global growth, but today it’s all about positive earnings momentum,” said Jeffrey Kravetz, regional investment director at U.S. Bank Private Client Reserve. “Bellwether S&P 500 companies are posting solid earnings, and the outlooks have been good.”
IBM’s fourth quarter earnings report was “arguably its cleanest quarter in years,” wrote Joel Kulina, analyst with Wedbush Securities, in a note to clients. Investors should take solace in management providing “further evidence of strength in software, analytics and services focused on hybrid cloud and digital strategy.” IBM’s strong numbers bode well for the cloud complex, he said.
“The market is reluctant to overcome fears of slowing global growth, China-U.S. trade relations, and the government shutdown,” Michael Arone, chief investment strategist at State Street Global Advisors told MarketWatch. “The culmination of all that suggests challenges for stocks to move higher, despite earnings that have been better than expected.”
How were other markets trading?
Asian markets traded mostly flat, with Japan’s Nikkei 225 NIK, -0.09% index closing 0.1% lower, while Hong Kong’s Hang Seng HSI, +0.34% index was virtually unchanged and the Shanghai Composite Index SHCOMP, +0.52% rose less than 0.1%.
In Europe, stocks were mixed, with the Stoxx Europe 600 SXXP, -0.06% closing down 0.1%.
Crude oil CLH9, -0.53% failed to hold early gains, with the U.S. benchmark lower, while gold GCH9, -0.29% settled virtually unchanged and the U.S. dollarDXY, +0.06% fell 0.2%.